This week was a very dynamic week for me as I made a bid every day (something which I have not done in the past 2 weeks).

During our expert group meeting, we didn’t really have much to discuss about because the production news for this week seemed pretty dry. We mainly based our conclusions off the numbers of the USDA report where we compared last week’s yield to this week’s. We expected:
– Corn prices to go down because of higher yield
– Wheat prices to go down because harvest in the Black Sea regions reported high supply
– Soybean prices were neutral because harvest season just began, so we weren’t sure what would happen.

Sept. 26^th
Did not bid, kept my contracts from last week.
Short/corn/1
Short/wheat/1
Long/soybean/1

So this week I decided to go all out and bid in each commodity with more contracts. Let’s see what happened…

Sept 27^th
For starters, looking at the trend and talking with classmates, I believed that the prices will be up for the beginning of the week because traders on the CBOT were active and everybody was trading. So I bid,

Long/wheat/3 at 652.4 => profit $370
Long/corn/3 at 652  => profit -$180
Soybean stayed the same => profit $170
Total profit for the day = $360
Margin after clearing = 27,670 + 360 = $28,030

Sept 28^th
Honestly, I didn’t have much of a strategy for the this day. I just thought, since the prices went up in the past few days, I had a feeling that prices will drop after a big spike. That seems to be the cycle that I have observed over the last 2 weeks. And it matched with what we learn in FRE 502/501, that prices fluctuates in cycles, going up down up down…..

So I bid,
Short/wheat/5 at 654  => profit $1890
Short/corn/5 at 649.1  =>  profit $2465
Short/soybean/5 at 1260  => $7170
Total profit for the day = $11,525
Margin after clearing = 28,030 + 11,525 = $39,555

I was extremely ecstatic because my net position had never been above 30k. I made a lot of money from the significant decrease in soybean. I didn’t have much rational reasoning for this, but soybeans had always seemed to be the commodity that dropped the most during bearish market.  I think  because harvest is just starting, so there is a higher supply of soybean in the market.

Sept 29^th
I looked at the market after it closed to see how the prices were doing. Surprisingly, the prices of all 3 commodities were going up! I was really scared because I had so many contracts in short. That day was also a very busy day for me, so I did not put much thought into what to do, so I tried to offset whatever I had.

So I bid,
Long/wheat/5 at 629.2 => profit $3910
Long/corn/5 at 625  => profit $1580
Long/soybean/1 at 1222  => profit -$1720
Total profit for the day= $3770
Margin after clearing = 39,555 + 3770 = $43,325

Thankfully, because i offset my short contracts,I made some money this day.

Sept 30^th
For the last day, I thought I was pretty set and didn’t have to do anything. However, when I checked the prices after market closing, the prices completely changed again!! I was so frustrated because I just DIDN’T UNDERSTAND WHY?!?!?!? And I wasn’t able to find much news about it, after such a dynamic week of bidding, I decided to just offset what I had in corn and soybean because those seemed to have fluctuated the most, and I kept my wheat contracts.

So I bid,
Didn’t do anything to wheat  => profit -$4500
Short/corn/2 at 634  => profit $160
Long/soybean/5 at 1233  => profit -$750
Profit of the day = -$5090
Margin after clearing = 45,325 + (-5090) = $38,235

Sigh…i should’ve offset those wheat contracts too…lol..”if only..”
I LOST 5k in wheat! It was crazy! I woke up at around noon, and I was casually checking the prices on my phone, and BAM! Prices were all in red, dropping at an average of 50cents!
I thought I was looking at the wrong site!! And right beside the price table was the news about US having an extra stock of corn!! So that was the reason! If only we had known about that earlier….
But one thing I did not understand was why would the prices of soybean and wheat also drop due to the extra corn stock?? Was it another issue to do with the EU??

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I will be reading up market closing reports to gain some insight into why the prices were like this. I am glad I made 10k earlier in the week, so I was able to still have a total gain after losing 5k on Friday.

So this week, I made a total profit of $9785! Which is a lot compared to the 2k I made in the last weeks each.

I still feel that my strategy is quite instinct-based, and I depend a lot on discussing with classmates. Hopefully in the coming weeks, I can decide on what to bid based on some real research and analysis.

What i learned this week…
After this dynamic week of bidding, i think bidding high number of contracts is actually less risky than just going 1 contract each day. It’s less risky, and you have a higher chance of making more money. I think it was a good idea that i bid 5 contracts each when i was quite sure of what the market was going to happen, that way i could make a bigger amount of money. Even later in the week, when the prices are less predictable, I am able to “afford” losing more. Not that anyone would want to lose, but at least my margin won’t be lower than what i started off.
|I know i mentioned that i would focus on more the long-term, and won’t change my bids due to the daily changes. And this week, i did the exact opposite, but hey~it didn’t turn out bad. hahah I think i’m just too risk-averse to wait and see…if i see something sketchy going on, i have to change it right away.

Anyway, I would like to see my margin pass the 40k mark next week!

Thanks for reading, sorry, don’t have anything too insightful~ ^^”

Caroline